Investors love the Qs because “they work.” The Nasdaq-100 Index has compounded wealth for a generation. But there’s a part of this story that almost never gets told…and it came to an end late last year. Shareholders of QQQ voted to “modernize” the ETF, reduce the expense ratio, and put control of marketing spend in the hands of Invesco.
QQQ’s success and QQQ’s marketing budget up until this point are not unrelated. And for the first time in the fund’s history, that budget is being dramatically cut. It may still be The Official ETF of NCAA March Madness, but we’re hearing that tagline a whole lot less this year!
One Shining Mandate
The Qs were established by Nasdaq in 1999 as a unit investment trust with a provision that is almost impossible to find anywhere else in asset management: a fixed percentage of revenue dedicated to marketing. Not discretionary. Not subject to annual review. Contractually mandated.
Last year, that mandate produced a marketing spend of around $170 million. For a single ETF! By the end of March Madness 2025, my ears were ringing…”become an agent of innovation with Invesco QQQ.” Frankly, it was getting out of hand.
Invesco thought so too. In July 2025, Invesco announced it was seeking shareholder approval to convert the UIT to an open-end fund and to become the fund’s investment advisor. The proposed new management fee: 0.18%, a 0.02% reduction. But the more significant number was the projected marketing spend being cut by close to 90%.
Invesco will book an estimated $150 million in additional annual revenue as a result. The marketing budget for the world’s most heavily-advertised ETF has plummeted, so what now?
A House of Marketing Cards?
Before celebrating QQQ as a low-cost index fund, it’s worth asking a question that rarely gets asked: which index, exactly, and why does it exist?
The Nasdaq-100 tracks the 100 largest nonfinancial companies listed on the Nasdaq (as opposed to the NYSE, LSE, etc.). Not the 100 largest technology companies. Not the 100 most innovative companies. The selection criterion is exchange listing — a company qualifies because of where its shares trade, not what it does. The practical result may surprise investors who think they own a pure-play tech fund. Costco is in QQQ. So is Walmart. So are Pepsi and Amgen. These are excellent businesses. They are not, by any reasonable definition, technology companies.
Anyone can create an index, and there are now more indexes than there are stocks in the U.S. market (3,000+). Every index reflects a set of construction rules that someone, somewhere, decided to codify. Some rules are thoughtful. Some are arbitrary. “Nonfinancial companies that list on Nasdaq” is a rule, but it leans more arbitrary than thoughtful. An index fund should not be taken at face value. “What index?” is perhaps the next question — and does that index represent a coherent investment thesis, or merely an artifact of financial history dressed up in marketing?
The Cost Question
Lastly, you’ll never find me railing against the “buy low-cost index funds” principle. Vanguard and Jack Bogle have done more for investors than many of us could ever dream to. They are heroes as far as I’m concerned.
However, the assumption embedded in this advice is often that every index fund is low-cost. That’s simply not the case. At 0.18%, QQQ costs more than double what comparable index ETFs charge for similar exposure. If investors crave genuine tech exposure or growth exposure, there are many funds that deliver it more precisely and/or at a fraction of the cost.
None of this means QQQ is a poor investment. It means investors should understand what they’re buying, why they are holding it, and whether the wrapper they’ve chosen actually reflects their intent. For a generation of investors, the answer to those questions has largely been shaped by $170 million a year in advertising. That era is over. The question now is whether the investment proposition can stand on its own.
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CONSIDER
“When you haven’t engaged with history, everything feels unprecedented.” – Kelly Hayes
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Let’s get after it this week!
Brooks
Brooks Palmer, CFP® is Head of Investments at Root where he helps identify, evaluate, and implement investment solutions tailored to clients’ needs. In Full-Court Press, he breaks down what’s happening in the markets—cutting through the noise and jargon—while connecting it to Root’s core investment tenets so you can make the most of your money and your life!
The examples provided are hypothetical and for illustrative purposes only. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. The information presented should not be construed as investment advice or a recommendation to buy or sell any security or implement a particular strategy.
Advisory services are offered through Root Financial Partners, LLC, an SEC registered investment adviser.